(Mar-04) Equities fluctuated as President Donald Trump’s tariffs on Canada, Mexico, and China went into effect (midnight New York time), leading to extended losses in oil. Furthermore, OPEC+ plans to revive halted production:
The tariffs prompted Canada to announce a sweeping package of levies and China to impose tariffs up to 15% on US exports. Investors sought safer havens due to rising geopolitical tensions and the potential for retaliatory levies. This broad risk-off sentiments has seem EM currencies struggling and some sell-off in risky assets as we saw bitcoin fail to main its gains after President Trumps announcement for crypto strategic reserves.
In Asia, attention turned to the National People’s Congress meeting in Beijing, where measures to stimulate the economy were anticipated. Beijing considered retaliatory actions on US agriculture and food products.
Recent US economic data showed disappointing results, including weaker housing, rising unemployment claims, and a drop in personal spending. Additionally, Trump paused all military aid to Ukraine, increasing pressure on President Volodymyr Zelenskiy.
The pressure on ZAR is still prevailing and we saw ZAR failing to benefit from the weaker USD environment seen yesterday. We expect the pressure on ZAR to ease after the budget speech next week Wednesday (12 March), but for now, we trade above 18.60.
Against the crosses:
Key events today:
(Mar-04) President Donald Trump paused military aid to Ukraine after a heated meeting with President Volodymyr Zelenskyy. This decision aims to increase pressure on Zelenskyy amid escalating tensions.
(Feb-24) The Rand’s VWAP for February was 18.35. By the end of the month, the Rand faced headwinds, fluctuating from a low of 18.43 to a high of 18.72. We saw marginal profits in the weaker USD environment yesterday, closing at 18.60. SA continues to grapple with a sluggish economy and political uncertainty, with the market now anticipating the Budget speech next Wednesday, March 12.
(Mar-04)
(Mar-04)
(Mar-04)
(Mar-04) We expect the Rand to reprice after the budget speech next week Wed, until then, we should continue trading the range 18.85 - 18.40, with risks to the topside as high as 19.10.
(Mar-04)
By Thuto Mukena - Institutional Sales Specialist (Mar-04)
Tariff execution day finally here, with Trump confirming yesterday that the much-anticipated tariffs on Canada and Mexico are taking course. Ahead of this, spot momentum has been quite interesting. Locally, the ZAR has remained range-bound for most of the past sessions, though leaning more on the weaker side as current market uncertainty supported broad dollar gains. Yesterday, after five consecutive sessions of weak momentum, the local unit strengthened to form its intra-session high at R18.5325/$ as the EM space saw some recovery at the back of a weaker dollar. The local vol market on the other hand traded better bid yesterday; interestingly, the 1-week implied vol tenor was the only outlier, dropping by 0.59 vol pp to close off the session at 11.47%, while the rest of the tenors edged higher, signaling that much of the uncertainty priced in sits at the longer dates relative to this week, despite the risk events lined up.
Yesterday, spot positioning saw some clawback of dollar longs, with US PMI manufacturing data printing at 50.3 vs. 50.8, exerting further pressure on the US dollar. On the tariffs front, the loonie attempted a recovery to 1.4367 on the day as the US dollar edged lower; however, that momentum against the greenback was short-lived, making the pair the outlier in the G10 space to close off the session weaker. Implied vols across both the high-beta and developed market spaces traded broadly lower, with the only outliers being USD/CAD and USD/MXN 1-week implied vols, which closed off the session firmer by 3bps and 92bps, respectively. This morning, the US dollar index opens a touch weaker with minimal movement, despite fresh headlines of Trump signing an action to impose 20% tariffs on China, while China is reportedly planning countermeasures, including tariffs of up to 15% on agricultural goods such as wheat, chicken, and corn.
The rand kick started off the session weaker at R18.5796/$ to the green back. We continue to look for the 18.50 to 18.80 range, with a break and close either side for new direction
Against the crosses:
On the data front today, locally we have GDP figures up next at 11:30 SA time. In the Eurozone Unemployment data stands ahead of us today.
By sizwe Mfayela - Institutional Sales Specialist (Mar-04)
Economic data releases